REC Ltd’s fundamental analysis highlights key financial metrics including market capitalization of ₹1,52,398 crore, PE ratio of 10.4, debt-to-equity ratio of 6.41, and return on equity of 22.2%. These figures reflect the company’s financial health and current market valuation.
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REC Ltd Overview
REC Ltd specializes in renewable energy solutions, offering expertise in solar, wind, and energy storage systems. Committed to sustainability and innovation, REC Ltd provides high-quality, efficient technologies designed to meet the growing demand for clean energy solutions.
The company has a market capitalization of ₹1,52,398 crore and is listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Currently, the stock is trading 11.5% below its 52-week high and 167% above its 52-week low.
REC Financial Results
REC’s financial results for FY24 show significant growth, with Total Income increasing to ₹47,571 crore from ₹39,339 crore in FY22. Net Profit rose to ₹14,504 crore, reflecting robust performance.
- Revenue Trend: REC’s Total Income surged by 20.4% to ₹47,571 crore in FY24 from ₹39,520 crore in FY23, showcasing strong revenue growth.
- Equity and Liabilities: REC’s Total Expenses increased to ₹30,632 crore in FY24, up from ₹25,410 crore in FY23, indicating higher operating costs.
- Profitability: Pre-Provisioning Operating Profit (PPOP) grew to ₹16,939 crore in FY24 from ₹14,110 crore in FY23, maintaining a strong PPOP margin of 35.61%.
- Earnings Per Share (EPS): EPS increased to ₹53.59 in FY24 from ₹42.28 in FY23, reflecting enhanced profitability per share.
- Return on Net Worth (RoNW): REC’s Net Profit rose to ₹14,504 crore in FY24, indicating strong returns, with a slight increase in Tax % to 20.82% from 19.55% in FY23.
- Financial Position: The company’s financial position strengthened, as seen by a rise in Profit Before Tax to ₹18,319 crore in FY24 from ₹13,968 crore in FY23, despite a slight decline in PPOP margin.
REC Financial Analysis
| FY 24 | FY 23 | FY 22 | |
| Total Income | 47,571 | 39,520 | 39,339 |
| Total Expenses | 30,632 | 25,410 | 22,546 |
| Pre-Provisioning Operating Profit | 16,939 | 14,110 | 16,793 |
| PPOP Margin (%) | 35.61 | 35.7 | 42.69 |
| Provisions and Contingencies | -1,380 | 142.17 | 3,470 |
| Profit Before Tax | 18,319 | 13,968 | 13,323 |
| Tax % | 20.82 | 19.55 | 17.97 |
| Net Profit | 14,504 | 11,237 | 10,917 |
| EPS | 53.59 | 42.28 | 50.82 |
| Dividend Payout % | 29.86 | 29.8 | 30.11 |
*All values in ₹ Crores
REC Company Metrics
REC Ltd’s market performance reflects significant investor interest, with a robust market capitalization and strong financial metrics. The stock shows notable gains over multiple periods, underscoring its solid financial health and growth potential.
- Market Cap: REC Ltd market capitalization stands at ₹1,52,398 crore, indicating a significant market presence and substantial investor confidence.
- Book Value: The book value of ₹277 per share highlights REC Ltd’s solid asset base and financial strength relative to its equity.
- Face Value: With a face value of ₹10.0, REC Ltd stock is priced attractively compared to its market value, offering the potential for capital appreciation.
- Turnover: The asset turnover ratio of 0.09 suggests efficient utilization of assets in generating revenue, contributing to overall financial performance.
- PE Ratio: A Price-to-Earnings ratio of 10.4 reflects the stock’s valuation relative to its earnings, indicating a potentially undervalued investment opportunity.
- Debt: The total debt of ₹4,67,523 crore, relative to equity, signifies a high leverage ratio, impacting the company’s financial risk and capital structure.
- ROE: With a Return on Equity (ROE) of 22.2%, REC Ltd demonstrates strong profitability and effective use of shareholder equity.
- EBITDA Margin: An EBITDA margin of 12.4% indicates robust operational efficiency and profitability, reflecting the company’s effective cost management.
- Dividend Yield: The dividend yield of 2.75% offers a steady income stream to investors, balancing growth potential with shareholder returns.
REC Stock Performance
The table highlights REC Ltd’s impressive return on investment (ROI) over different periods. Over 5 years, ROI stands at 40%, reflecting steady growth. Over 3 years, it increases to 74%, and a remarkable 161% ROI is achieved over the past year, demonstrating exceptional recent performance.
| Period | Return on Investment (%) |
| 5 Years | 40% |
| 3 Years | 74% |
| 1 Year | 161% |
Example
Suppose Investor A invested ₹1,00,000 in REC Ltd. Over 5 years, this investment would have grown by 40%, resulting in a return of ₹40,000, making the total value ₹1,40,000.
For a 3-year investment, the same ₹1,00,000 would have appreciated by 74%, yielding ₹74,000 in returns, and the total value would be ₹1,74,000.
If the investment was made a year ago, with a 161% return, the ₹1,00,000 investment would have grown by ₹1,61,000, making the total value ₹2,61,000.
REC Peer Comparison
The competitor analysis highlights significant performance variability. REC stands out with a Market cap of ₹148343.58 crores, a PEG ratio of 0.51 and a remarkable one-year return of 153.75%. In contrast, Gujarat State Finance, with a minimal market cap, shows a notable negative return over one year.
| Sl No. | Name | CMP Rs. | Mar Cap Rs.Cr. | PEG | 3mth return % | 1Yr return % |
| 1 | I R F C | 179.06 | 234456.41 | 1.57 | 13.58 | 252.13 |
| 2 | Power Fin.Corpn. | 484.65 | 159972.57 | 0.52 | 6.56 | 129.43 |
| 3 | REC Ltd | 563.7 | 148343.58 | 0.51 | 4.18 | 153.75 |
| 4 | Indian Renewable | 236.2 | 63445.43 | 1.4 | 38.01 | |
| 5 | IFCI | 70.37 | 18379.07 | 7.01 | 25.89 | 392.1 |
| 6 | Tour. Fin. Corp. | 176.15 | 1631.96 | 16.1 | 7.34 | 70.94 |
| 7 | Guj. State Fin. | 23.53 | 209.67 | -9.74 | 193.03 |
REC Shareholding Pattern
The shareholding Pattern of the company shows consistent promoter ownership at 52.63% across all periods. Foreign Institutional Investors (FIIs) have a stable presence, increasing slightly to 20.43%. Domestic Institutional Investors (DIIs) and Retail & others also exhibit minor fluctuations, reflecting relatively stable investor sentiment.
| Jun 2024 | Mar 2024 | Dec 2023 | Sept 2023 | |
| Promoters | 52.63 | 52.63 | 52.63 | 52.63 |
| FII | 20.43 | 19.91 | 20.6 | 20.36 |
| DII | 14.68 | 15.44 | 14.16 | 14.1 |
| Retail & others | 12.26 | 12.01 | 12.59 | 12.91 |
*All values in %
REC Limited History
Incorporated on July 25, 1969, as ‘Rural Electrification Corporation Private Limited,’ the company shifted to public status in 2003, becoming REC Ltd. Initially focused on financing rural electrification, it evolved significantly over the decades.
REC Ltd achieved notable milestones, including being declared a Public Financial Institution in 1992 and registering as an NBFC in 1998. It received high ratings and awards, underscoring its strong financial performance and operational excellence.
Recent years saw REC Ltd expanding its financial initiatives, including issuing bonds and reorganizing subsidiaries. The company also issued bonus shares in 2022, reflecting its continued growth and commitment to shareholders.
How To Invest In REC Ltd Share?
Investing in REC Ltd shares is a straightforward process:
- Open a Demat Account: Start by opening a Demat and trading account with a reliable brokerage firm like Alice Blue.
- Complete KYC: Submit necessary documents for KYC verification.
- Fund Your Account: Deposit funds into your trading account.
- Buy Shares: Search for REC Ltd shares and place your buy order.
REC Limited Fundamental Analysis – FAQs
REC Ltd’s fundamental analysis reveals a market capitalization of ₹1,52,398 crore, a PE ratio of 10.4, a debt-to-equity ratio of 6.41, and a return on equity of 22.2%, indicating strong financial health and market valuation.
The market capitalization of REC Ltd is ₹1,52,398 crore. This figure represents the total value of the company’s outstanding shares in the stock market, calculated by multiplying the current share price by the total number of shares outstanding.
REC Limited, established in 1969, is an Indian public financial institution that finances rural electrification and power sector projects. It supports energy infrastructure development and electrification schemes, playing a key role in enhancing rural energy access across India.
REC Limited is owned by the Government of India, which holds a majority stake in the company. As a public sector enterprise, REC operates under the Ministry of Power and is instrumental in funding rural electrification and power sector projects.
The main shareholders of REC Limited are the Government of India, which holds a majority stake, and various institutional investors. The government’s substantial ownership reflects its role in supporting REC’s mission to finance rural electrification and power sector development.
REC Limited operates in the financial services industry, specifically focusing on the power sector. It provides financing for rural electrification and infrastructure projects, supporting energy sector development through loans and funding initiatives for power and electricity projects.
To invest in REC Ltd shares, open a demat and trading account with a stockbroker. Fund your account, then use the broker’s platform to buy REC Ltd shares. Monitor your investment and stay informed about the company’s performance.
Determining if REC Ltd is overvalued or undervalued requires a comprehensive analysis of its financials, growth prospects, industry trends, and market conditions. Investors should consider metrics like the P/E ratio and PEG ratio, and compare them with industry peers and historical values for a balanced assessment.
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Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.
